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Commencement Address 2016American University in Beirut

Nassim Nicholas Taleb

Dear graduating students,This is the first commencement I have ever attended

(I did not attend my own graduation). Further, I haveto figure out how lecture you on success when I do notfeel successful yet –and it is not false modesty.

Success as a Fragile Construction

For I have a single definition of success: you look in themirror every evening, and wonder if you disappoint theperson you were at 18, right before the age when peoplestart getting corrupted by life. Let him or her be the only

 judge; not your reputation, not your wealth, not yourstanding in the community, not the decorations on yourlapel. If you do not feel ashamed, you are successful. Allother definitions of success are modern constructions;fragile modern constructions.

The Ancient Greeks’ main definition of success was tohave had a heroic death. But as we live in a less martialworld, even in Lebanon, we can adapt our definition of success as having taken a heroic route for the benefits of 

the collective, as narrowly or broadly defined collectiveas you wish. So long as all you do is not all for you:secret societies used to have a rule for  uomo d’onore: youdo something for yourself and something for other mem-

 bers. And virtue is inseparable from courage. Like thecourage to do something unpopular. Take risks for the

 benefit of others; it doesn’t have to be humanity, it can be helping say Beirut Madinati or the local municipality.The more micro, the less abstract, the better.

Success requires absence of fragility. I’ve seen billion-aires terrified of journalists, wealthy people who feltcrushed because their brother in law got very rich, aca-demics with Nobel who were scared of comments on the

web. The higher you go, the worse the fall. For almostall people I’ve met, external success came with increasedfragility and a heightened state of insecurity. The worstare those "former something" types with 4 page CVswho, after leaving office, and addicted to the attentionof servile bureaucrats, find themselves discarded: as if you went home one evening to discover that someonesuddenly emptied your house of all its furniture.

But self-respect is robust –that’s the approach of theStoic school, which incidentally was a Phoenician move-ment. (If someone wonders who are the Stoics I’d sayBuddhists with an attitude problem, imagine someone

 both very Lebanese and Buddhist). I’ve seen robustpeople in my village Amioun who were proud of beinglocal citizens involved in their tribe; they go to bedproud and wake up happy. Or Russian mathematicianswho, during the difficult post-Soviet transition period,were proud of making $200 a month and do workthat is appreciated by twenty people –and consideredthat showing one’s decorations –or accepting awards

–were a sign of weakness and lack of confidence inone’s contributions. And, believe it or not, some wealthypeople are robust –but you just don’t hear about them

 because they are not socialites, live next door, and drinkArak baladi not Veuve Cliquot.

Personal History

Now a bit of my own history. Don’t tell anyone, but allthe stuff you think comes from deep philosophical re-flection is dressed up:  it all comes from an ineradicablegambling instinct –just imagine a compulsive gamblerplaying high priest. People don’t like to believe it: myeducation came from trading and risk taking with some

help from school.I was lucky to have a background closer to that of a

classical Mediterranean or a Medieval European than amodern citizen. For I was born in a library –my parentshad an account at Librarie Antoine in Bab Ed Driss anda big library. They bought more books than they couldread so they were happy someone was reading the booksfor them. Also my father knew every erudite person inLebanon, particularly historians. So we often had Jesuitpriests at dinner and because of their multidisciplinaryerudition they were the only role models for me: myidea of education is to have professors just to eat withthem and ask them questions. So I valued erudition over

intelligence –and still do. I initially wanted to be a writerand philosopher; one needs to read tons of books forthat –you had no edge if your knowledge was limitedto the Lebanese Baccalaureat program. So I skippedschool most days and, starting at age 14, started readingvoraciously. Later I discovered an inability to concentrateon subjects others imposed on me. I separated school forcredentials and reading for one’s edification.

First Break

I drifted a bit with no focus, and remained on page 8 of the Great Lebanese Novel until the age of 23 (my novel

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was advancing one page per year). Then I got a breakon the day when at Wharton I accidentally discoveredprobability theory and became obsessed with it. But, asI said   it did not come from lofty philosophizing andscientific hunger, only from the thrills and hormonalflush one gets while taking risks in the markets. Afriend had told me about complex financial derivativesand I decided to make a career in them. It was acombination of trading and complex mathematics. Thefield was new and uncharted. But they were very, verydifficult mathematically.

Greed and fear are teachers. I was like people withaddictions who have a below average intelligence butwere capable of the most ingenious tricks to procuretheir drugs. When there was risk on the line, suddenly asecond brain in me manifested itself and these theorems

 became interesting. When there is fire, you will runfaster than in any competition. Then I became dumbagain when there was no real action. Furthermore, asa trader the mathematics we used was adapted to our

problem, like a glove, unlike academics with a theorylooking for some application. Applying math to practicalproblems was another business altogether; it meant adeep understanding of the problem before putting theequations on it. So I found getting a doctorate after 12years in quantitative finance much, much easier thangetting simpler degrees.

I discovered along the way that the economists andsocial scientists were almost always applying the wrongmath to the problems, what became later the themeof   The Black Swan. Their statistical tools were not justwrong, they were outrageously wrong –they still are.Their methods underestimated "tail events", those rare

 but consequential jumps. They were too arrogant toaccept it. This discovery allowed me to achieve financialindependence in my twenties, after the crash of 1987.

So I felt I had something to say in the way weused probability, and how we think about, and manageuncertainty. Probability is the logic of science and philos-ophy; it touches on many subjects: theology, philosophy,psychology, science, and the more mundane risk engi-neering –incidentally probability was born in the Levantin the 8th Century as  3elm el musadafat, used to decryptmessages. So the past thirty years for me have been fla-neuring across subjects, bothering people along the way,pulling pranks on people who take themselves seriously.

You take a medical paper and ask some scientist full of himself how he interprets the "p-value"; the author will

 be terrorized.

The International Association of Name Droppers

The second break came to me when the crisis of 2008happened and felt vindicated and made another bundleputting my neck on the line. But fame came with thecrisis and  I discovered that I hated fame, famous peo-ple, caviar, champagne, complicated food, expensivewine and, mostly wine commentators. I like mezze with

local Arak baladi, including squid in its ink (sabbidej),no less no more, and wealthy people tend to have theirpreferences dictated by a system meant to milk them.My own preferences became obvious to me when aftera dinner in a Michelin 3 stars with stuffy and boringrich people, I stopped by Nick’s pizza for a $6.95 dishand I haven’t had a Michelin meal since, or anythingwith complex names. I am particularly allergic to peoplewho like themselves to be surrounded by famous people,the IAND (International Association of Name Droppers).So, after about a year in the limelight I went back tothe seclusion of my library (in Amioun or near NY),and started a new career as a researcher doing technicalwork. When I read my bio I always feel it is that of another person: it describes what I did not what I amdoing and would like to do.

On Advice and Skin in the Game

I am just describing my life. I hesitate to give advice because every major single piece of advice I was giventurned out to be wrong and I am glad I didn’t followthem. I was told to focus and I never did. I was told tonever procrastinate and I waited 20 years for  The Black Swan   and it sold 3 million copies. I was told to avoidputting fictional characters in my books and I did put inNero Tulip and Fat Tony because I got bored otherwise.I was told to not insult the New York Times and the WallStreet Journal; the more I insulted them the nicer theywere to me and the more they solicited Op-Eds. I wastold to avoid lifting weights for a back pain and becamea weightlifter: never had a back problem since.

If I had to relive my life I would be even more

stubborn and uncompromising than I have been.One should never do anything without skin in thegame. If you give advice, you need to be exposed tolosses from it. It is an extension to the silver rule. So Iwill tell you what tricks I employ.

•  Do not read the newspapers, or follow the news inany way or form. To be convinced, try reading lastyears’ newspaper. It doesn’t mean ignore the news;it means that you go from the events to the news,not the other way around.

•   If something is nonsense, you say it and say it loud.You will be harmed a little but will be antifragile –in the long run people who need to trust you will

trust you.When I was still an obscure author, I walked outof a studio Bloomberg Radio during an interview

 because the interviewer was saying nonsense. Threeyears later Bloomberg Magazine did a cover storyon me. Every economist on the planet hates me(except of course those of AUB).I’ve suffered two smear campaigns, and encour-aged by the most courageous Lebanese ever sinceHannibal, Ralph Nader, I took reputational risks byexposing large evil corporations such as Monsanto,and suffered a smear campaign for it.

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•  Treat the doorman with a bit more respect than the big boss.

•   If something is boring, avoid it –save taxes and visitsto the mother in law. Why? Because your biology isthe best nonsense detector; use it to navigate yourlife.

The No-NosThere are a lot of such rules in my books, so for now letme finish with a maxim. The following are no-nos:

Muscles without strength,friendship without trust,opinion without risk,change without aesthetics,age without values,food without nourishment,power without fairness,facts without rigor,degrees without erudition,militarism without fortitude,

progress without civilization,complication without depth,fluency without content,and, most of all, religion without tolerance.

Thank you.